Delaware Contractor License Bond

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Learn what surety bonds are, the different types of surety bonds, and how you can get bonded.Surety bonds are so confusing. I was told I had to post one but I have no idea what they are and which one is right for me. - Don't worry about it. I'll tell you everything about them. In general, surety bonds are not designed to protect your business, but rather to protect the public from dishonest business practices. A surety bond is a three-way agreement between you (the Principal), the Obligee (typically, a government department) and the Surety bond company which ensures that the bonded principal will comply with all the rules and regulations. There are four main types of surety bonds: license and permit bonds, contract bonds, court bonds and fidelity bonds. - I understand but aren't they all the same? Not exactly. Contract bonds are sometimes referred to as construction bonds. Contract bonds are designed to guarantee the performance of obligations under a contract. In other words, contract bonds protect the project owner (the obligee) by guaranteeing that the contractor will perform in accordance with the terms of the contract. There are several types of contract bonds, such as bid bonds, performance bonds and among others subdivision bonds. - Thanks, John! What about license bonds? What is the difference between license and contract bonds? License and permit bonds can be required either by the federal government, the state or the municipality. It is a prerequisite to receive a license or permit to engage in certain business activities. There are a number of license and permit bonds, such as auto dealer bonds, contractor license bonds, freight broker bonds, mortgage broker bonds and many more. For example, auto dealer bonds are required by States Department of Motor Vehicles and every state has their own bond requirements. - Thanks, John! Now I know what contract and license bonds are. What about court bonds? - Court bonds guarantee that the fiduciary will fulfill his or her responsibilities as ordered by the law or the court. There are a few types of court bonds, such as appeal bonds, guardian bonds and probate bonds. - I understand that surety bonds are designed to protect the public, but are there bonds that protect me as a business? - Yes. Fidelity bonds, also referred to as fidelity bond insurance, will protect you and your clients from any employee dishonesty, such as theft, embezzlement or forgery. You can think of fidelity bonds more as a traditional insurance policy than a typical surety bond. And these are the main types of bonds. I hope this explanation helped you figure out which one you need for your business. - Thanks, John! Now I know what surety bonds are and how they work.

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What Is a Delaware Contractor License Bond?

In a number of places in Delaware, contractors have to get a contractor license bond in order to get licensed and be allowed to operate. Construction specialists in Newark, Wilmington, and New Castle County, as well as non-residential contractors, all have to post a bond before launching their business.

The goal of your Delaware surety bond is to guarantee that you will follow all local and state rules that govern your trade. If any unlawful actions on your side lead to damages for another party, they can seek a compensation by making a claim on your bond.

The license bond works like a contract between three entities. Your contracting business is the principal that has to get bonded. The respective local or state authority that requires the bond is the obligee. The surety is the party that provides the bond and backs your company.

Frequently Asked Questions

Who needs this bond?

Not all contractors in the state have to get bonded in order to obtain their Delaware contractor license. However, some cities and counties do require contractors to obtain a surety bond.

General contractors, subcontractors, and minor renovations contractors in Newark need to post contractor license bonds in an amount set by the City of Newark that depends on the license type. The bond guarantees you will follow the city’s Construction Codes, as well as federal and state regulations.

Plumbers and contractors working on public streets, sidewalks and curbs in the City of Wilmington also need to get bonded with the city authorities.

In the New Castle County, Class A, B, C and U contractors, as well as master HVACR contractors, master plumbers, sewer and drainage cleaners, decorative appliance contractors, outside utility contractors, and third party inspectors all need a license bond. They have to provide it to the county authorities. The bond ensures your compliance with the New Castle County Building Code, as well as with state and federal laws.

Non-residential contractors who want to conduct their activities in Delaware need to get bonded as well. They have to provide a bond in an amount equal to 6% of the project value of the work they want to execute.

How much does it cost to get bonded?

The bond requirement for Delaware contractors depends on their location. Your city or county authorities set the exact bond amount that you have to provide. You can consult the bond prices in the table at the end of this section. In case you are contractor from outside Delaware, you will have to furnish a bond which is 6% of the contract amount you will be working on in the state.

However, you don’t pay the whole bond amount to get bonded. You only cover a bond premium, which is a few percentage points of that amount. For applicants with good finances, the surety bond cost is likely to be 1%-5% of the bond amount.

Your exact bond price is formulated on the basis of your personal and business finances. The surety you apply with needs to take a close look at your personal credit score, business documents, any assets and liquidity, as well as professional experience. Your bond price is likely to be lower if your overall application is solid.

Surety Bond Cost Based on Credit Score

Surety bond name

Surety bond amount

Above 700

Between 650-699

Between 600-649

Below 599

City of Wilmington contractor bond

$3,000

$100

$100

$100-$150

$150-$300

City of Newark

General contractor bond for projects below $100,000

HVAC, fire, plumbing and mechanical limited subcontractor bond

$50,000

$375-$750

$500-$1,250

$1,250-$2,500

$2,500-$5,000

General contractor bond for projects between $100,000 and $250,000

$75,000

$562,5-$1,125

$750-$1,875

$1,875-$3,750

$3,750-$75,000

General contractor bond for projects between $250,000 and $500,000

$100,000

$750-$1,500

$1,000-$2,500

$2,500-$5,000

$5,000-$10,000

General contractor bond for projects between $500,000 and $999,999

$150,000

$1,125-$2,500

$1,500-$3,750

$3,750-$7,500

$7,500-$15,000

Unlimited general contractor bond for projects above $1 million

$200,000

$1,500-$3,000

$2,000-$5,000

$5,000-$10,000

$10,000-$20,000

Minor renovation contractor bond for projects below $25,000

$10,000

$100-$150

$100-$250

$250-$500

$500-$1,000

Minor renovation contractor bond for projects between $25,000 and $75,000

Can I get a bond with bad credit?

It can be a challenge to get the contractor license bond you need if you have problematic finances. Lance Surety Bonds runs its Bad Credit Surety Bonds program to help applicants with low credit scores, tax liens, bankruptcies, or civil judgements.

You can expect a bonding rate in the range of 5%-10%, which compensates for the higher risk. However, we will still find the best matching bond option for you. We work with a number of trusted A-rated, T-listed surety companies and can shop around for you.

How do I get my bond?

In case you want to learn more about how bonding works, we can help. You can read through our How to Get Bonded page, or simply call us at (877) 514-5146. Lance Surety Bonds’ experts will be happy to assist you.

What happens in case of a bond claim?

Your contractor license bond does not protect your business. Instead, if safeguards the interests of your customers. If they are harmed by any illegal actions that you might engage in, they can make a claim on your bond. The maximum sum they can seek as a reimbursement is the bond amount you have posted.

Even though the surety may repay the harmed party initially, you are liable to cover all costs related to proven bond claims. This means that it is a wise idea to avoid claims as much as possible. They can be a serious threat to your finances and reputation.

What Our Clients Have To Say?

Quick response times and turn around for issuing bonds. Great customer service and very knowledgeable. We have used Lance Surety multiple times and have never been disappointed. Highly recommend them and Collette!

Andrew Poincot

Long story short, these guys cut through the B.S. and get the job done. Responsiveness, excellent! Communication, excellent! Respect for their industry partners, excellent! John, Collette, Ryan, you're all-stars! Thank you!

Margie Martinez

We decided for Lance Surety Bond's quote for 2 reasons; Price and Customer Service. Our Representative Ryan was just SUPERB!! [...] I highly recommend Lance Surety Bond for all your Bonding needs! I'll definitely come back for all of mine. :-) Thanks Ryan!